If you are a home owner, chances are pretty good you used your home as a sort of ATM with patio chairs in recent years to help pay for all those nifty goodies we Americans love to purchase whether we need them or not.
Well, the evidence now strongly shows the party is over!
The impact of the subprime mortgage crisis is now being felt in everything from credit card debt which can’t be repaid, to worries about being able to pay your child’s college tuition.
Look at some of these figures as compiled by the New York Times:
5.7 percent roughly of home equity lines of credit are now either delinquent or in default and that, says the Times, is up from 4.5 percent the year before.
Auto loans now show 7.1 percent as being in trouble…the year before, that figure was 6.1 percent.
Personal bankruptcy filings are inching upward.
A big problem, of course, is that as housing prices fall in many parts of the nation, people lose their ability to cash in against their house by refinancing and they can’t sell without suffering a significant loss.
The dirty little secret of the American economy is that its engine is fueled in large measure by the willingness of people to go out on a financial limb and use money they don’t have in the form of credit to buy things .
Once Americans stop doing that in large enough numbers, we have, in effect, altered the way our economy functions and we have yet to figure out a good way to compensate.
The truly scary thing is…maybe there isno way to compensate? Then what?
Article Author:
Charles FeldmanCharles has written 147 articles for us.
Visit Charles's Website: http://www.thefeldmanblog.com
Charles is currently reporting for KNX Radio in Los Angeles, is the co-author of the book No Time To Think, and can be found commenting about the news on his blog, The Feldman Blog.
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You think you are having it tough.I bought my place in the UK 18 months ago since when there has been a decline in property prices and several intrest rate rises. the nett result is my mortgage is now worth more than my house
I think thats the beauty of america….at the same time I think americans over extend themselves too much
I am one of those people who are feeling the credit crunch. Not only has my home value declined, but the jobs in my field (mortgage) have significantly dipped as well.
Let’s hope that our economy starts getting better, or we’ll see some big hurdles to overcome.
“A big problem, of course, is that as housing prices fall in many parts of the nation, people lose their ability to cash in against their house by refinancing and they can’t sell without suffering a significant loss.”
Many folks have come to the realization that home equity acceleration is a great way to overcome this situation:
More and more folks are using a Home Equity Line of Credit (HELOC) or a business-line-of-credit (BLOC) or personal-line-of-credit (PLOC) as an interest cancellation account to accelerate their home equity and payoff their home *years* sooner than listed on their mortgage amortization schedule.
Unfortunately, today’s Real Estate market means that folks can no longer count on appreciation to build home equity. Those who realize that they need to pay down their current mortgage debt are looking for alternate ways to aggressively (yet safely) build equity.
And they’ve discovered a perfect online system to do that; they can focus on their wealth accumulation goals while accelerating their equity simply by using an Advanced Line of Credit (ALOC) to ‘power’ the Money Merge Account™ financial solutions program.
A typical 30 year loan (of whatever type) can be paid down in 1/3 to 1/2 the time — it’s a great way to save *huge* amounts of income by eliminating a mortgage amortization front-end interest load. (On a million-plus dollar home, I’ve personally seen where the Money Merge Account™ program will save the homeowner $750,000 in interest charges!)
And the best thing – homeowners don’t have to refinance their existing mortgage or, in most cases, make any adjustments to their lifestyle.
It is unfortunate that most of us were never taught to follow three essential principles: (1) Avoid paying interest, whenever possible, (2) Use other people’s money, whenever possible and (3) Find and use a financial system that will guide you, especially if you have the tendency to go off-track. The Money Merge Account™ software and the program’s counselors use these principles to keep each homeowner focused on their wealth accumulation goals.
I’d be happy to provide further details…
It’s absolutely amazing how many people out there over extend themselves in order to drive a nice car and have nice material possessions. It seems like nobody really ever thinks anything through, America just has the mindset “How can I get what I want RIGHT NOW”
Keep up the good info on your blog!